How Are Security Tokens Changing The Way We View Investments?

As the age of cryptocurrency looms on the horizon, and the growing popularity of the security token offering explodes across exchange platforms, now more than ever before companies, organizations, and entities are turning to crowdsale funding to finance traditional investment opportunities. With exultant claims of their low-cost exchange benefits, asset fractionalization power, and ability to lock-down capital without restricting investor movements, these digital tokens are starting to disrupt an entire industry.

So, what is a security token? Simply put, these crypto securities represent “tokenized”, or digital, rights to the ownership of a specified amount of asset held by an issuing entity. Think of these tokens as highly liquid “shares” representing pieces of illiquid, high-value assets that investors can now easily exchange without suffering a significant loss in value. Understanding this perk, it’s easy to see why more and more people are beginning to notice the true power of security tokens

Organizations that have adopted blockchain asset management, can now use security tokens as a way to “fractionalize” their asset value, and distribute them among investors. This allows entities the possibility of providing a safe, trusted exchange environment where initial investors can then sell their tokens in secondary markets without worrying about dipping below the fair market value. This alleviates risk levels, boosts market accessibility to high-value assets, and facilitates “wiggle” room for flighty investors. Essentially, the tokens allow issuers to retain normal asset values, while simultaneously granting investors opportunities to leave illiquid investments early.

So why aren’t other types of crypto derivatives receiving the same level of trust and popularity?

The answer is easy; regulation. Since security tokens by nature represent sharable, tradable assets, they are inherently subjugated to SEC regulations. This means investors have a safer route for crypto funding versus alternatives such as ICOs and utility tokens. Check out the list below that stacks an STO against an ICO, and it’s clear why so many are starting to place their trust within digital securities

STO

  • Security compliant and SEC-regulated
  • Sources value from tradable assets
  • Allows secondary trading
  • Reduces investment risks

ICO

  • Not regulated by any central authority
  • Value not sourced from assets
  • Highly volatile markets
  • Not designed as investments

So, if you’re interested in generating your own security token, then check out CoinLaunch’s DApp store​ now, and discover all the necessary creation tools, applications, and expert ​crypto consulting​ needed to create, deploy, and manage crypto assets. We’ll help you produce a regulatory compliant security token so that you can start taking advantage of the investment benefits these tokens are offering. With more and more regulators and institutions implementing crypto infrastructure daily, let ​CoinLaunch​ give you the platform you need to leap into this market.